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T-Mobile overcharged subscribers of hundreds of millions of dollars

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July 2, 2014

The U.S. Federal Trade Commission is accusing T-Mobile of overcharging its subscribers with hundreds of millions of dollars in bogus fees.

The FTC has filed a lawsuit late yesterday alleging that T-Mobile earned an illegal windfall in recent years from 3rd-party merchants offering bogus text message subscriptions for things like flirting tips, horoscopes and celebrity gossip, among other things.

Those charges frequently weren't authorized by T-Mobile subscribers. The fees were allegedly concealed on customers' monthly bills.

As many as 40 percent of those customers hit with these monthly charges sought refunds, a fact that the FTC says should have been "an obvious sign to T-Mobile that the charges were never authorized."

The complaint alleges that the charges took place between 2009 until December of 2013, and that T-Mobile already had the documentation of very high complaint levels as early as 2012 but never did anything to correct the situation.

"T-Mobile knew about these fraudulent charges and failed to stop them or take any action," FTC consumer protection director Jessica Rich said on a conference call with the media.

The Federal Communications Commission is also investigating T-Mobile's alleged overcharges, she added.

T-Mobile CEO John Legere fired back yesterday, calling the FTC complaint "sensationalized, unfounded and without merit."

In a statement, Legere claims that T-Mobile stopped billing for premium texting services in 2013 and created a program for customers to receive full refunds.

He called on the FTC to hold the nefarious text subscription services responsible-- not T-Mobile.

"T-Mobile is fighting harder than any of the wireless carriers to change the way the mobile industry operates and we are very disappointed that the FTC has chosen to file this action against the most pro-consumer company in the industry rather than the real bad actors," he said.

The FTC doesn't yet have precise estimates for the number of customers affected or the total amount of bogus charges. Those issues will be settled in court.

The FTC engaged in settlement talks with T-Mobile before Tuesday's announcement but failed to reach an agreement, Rich said. The agency hopes to secure refunds for all consumers affected.

The FTC lawsuit comes as T-Mobile engages in an aggressive marketing campaign dubbed the "un-carrier" strategy.

"The goal is to turn the wireless industry around and in a meaningful manner, and T-Mobile's been doing that by eliminating contracts, dropping international roaming charges and offering to pay competitors' customers $650 to switch over," added Legere.

Speaking at a press event in Seattle in mid-June, Legere said with disdain about the billing practices of larger rivals AT&T and Verizon.

"They see everything as an opportunity to tell customers what to do and to gouge them," Legere said.

T-Mobile is itself in the process of finalizing a $32 billion merger with Sprint, according to various reports posted in June. If approved by regulators, the deal would unite the nation's third- and fourth-largest wireless carriers into a combined entity with subscriber numbers comparable to Verizon and AT&T.

In other mobile news

The German government said that it will cancel its contract with Verizon, citing some spying fears.

"The pressures on wireless networks as well as the overall risks from highly-developed viruses or Trojans are rising rapidly," Germany's Interior Ministry said.

"Furthermore, the ties revealed between foreign intelligence agencies and firms in the wake of the U.S. National Security Agency (NSA) affair in June 2013 reveal that the German government needs a very high level of security for its critical networks," it added.

The decision comes following several reports that U.S. intelligence agencies have been monitoring German communications networks, even to the point of tapping the mobile phone of German Chancellor Angela Merkel.

Last month, Germany said it didn't think it had enough evidence to pursue legal action over the Merkel affair, but that didn't stop German officials from condemning U.S. activities based on reports in the magazine Der Spiegel, which cited documents leaked by Edward Snowden among its sources.

Merkel herself has lent her support to the concept of the European Union building new telecommunications networks that would be more difficult for the U.S. to spy on, something she has discussed with French President François Hollande.

And Germans aren't alone in their outrage. Upon hearing about the Merkel affair, U.S. senator John McCain called for the resignation of then-NSA chief General Keith Alexander.

That was largely lip service, though-- Alexander retired from military service in March 2014, to be replaced by Navy Vice Admiral Michael Rogers.

German carrier Deutsche Telekom will reportedly pick up where Verizon leaves off after getting the boot, and Reuters notes that Deutsche Telekom already has a contract with the German government for carrying its most sensitive phone calls and data on wireless as well as land lines.

In a statement, Verizon protested the German government's decision and said that there was nothing to fear from U.S. spy agencies.

"Verizon Germany is a German company and we comply with German law," Verizon spokesman Detlef Eppig said. "The US government cannot compel us to produce our customers' data stored in data centres outside the US, and if it attempts to do so, we would challenge that attempt in a court."

In other mobile news

Google just gave us a small preview of its upcoming 'L Release' of its Android operating system, due to be released sometime in the fall.

At Google I/O, vice president Sundar Pichai said that the next iteration of the mobile operating system, featuring more than 5,000 new APIs, is designed for form factors beyond mobile.

To be sure, Pichai outlined a few but new principles for the redesign of Android and Chrome OS, including contextually aware, voice enabled and seamless.

Engineering director Dave Burke highlighted some of the new features of the revised OS like personal unlocking that uses voice recognition, Bluetooth connections, and other custom options for skipping the PIN lock.

He also said that the new L release will run entirely on Android’s new 64-bit compatible runtime, ART, that provides performance improvement without developers needing to update any code.

Android design head Matias Duarte described the new look as “one consistent vision for mobile, desktop and beyond.”

“Material design,” as Duarte explained it, was the inspiration for the expanding and reforming user interface design inside the new Android release.

Developers will now be able to assign different elevations for design aspects and Android will illustrate that depth with shadows and lighting.

For example, Android TV is an extension of the Android SDK designed to fit bigger screens.

The user interface compiles streaming services, games and relevant information while enabling voice controls, search, and Google Cast support.

Android TV can leverage an Android Wear device as a directional pad for navigating the screen. It’s coming to Sony and Sharp TVs in 2015 and set-top boxes from Asus and others are coming soon as well.

Engineering director David Singleton provided a quick demo and update for Android Wear. He announced that a full Android Wear SDK was being made available today, opening up all the sensors and features of wearable devices.

He confirmed the Samsung Gear Live and LG G Watch, both available for order tomorrow. Moto 360 will be available later this summer.

Android Auto, is a voice-enabled, simplified version designed for in-vehicle telematics screens.

The demo focused on music, navigation and messaging. He announced that forty new partners have joined the Open Automotive Alliance and promised the first new cars with Android Auto would be out this year.

Even before all the new iterations of Android, the OS has a very big user base. Pichai said Android now has one billion active daily users.

But Google is still talking about getting its OS out to the next five million people. Android One is a new initiative working in that direction.

It’s a set of hardware reference platforms and turnkey solution for OEMs with the same stock Android software.

It will open up Google Play to locally relevant apps and offer full updates on-par with what Nexus devices already receive.

Pichai revealed Micromax, Karbonn and Spice as the first OEM partners for Android One.

In other mobile and wireless news

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Japanese wireless carrier DoCoMo has come up with an interesting new concept-- a wearable SIM card that will authenticate all your devices on its network, all under one single account. And it works.

DoCoMo says the portable SIM is currently a “pocketsize mini device” but that “further downsizing” will deliver “convenient wearable devices”.

Those devices will include a SIM slot, Bluetooth and NFC. Here's how the company sees the device working.

“By simply waving Portable SIM next to a mobile device, the user's subscriber identity can be transmitted to the mobile device via Bluetooth, eliminating the need to physically insert a SIM card.

Then, using that feature, the smartphone user can switch their subscriber identity from a personal device to a shared tablet in the workplace.

For security reasons, the switched phone number in the smartphone is locked down once the Bluetooth link is broken.

Portable SIM cards can securely store multiple credentials, such as IDs and passwords, so it also can be used with PCs and other connected devices to eliminate the need to type in such information everytime when accessing online-shopping and other websites.”

And DoCoMo might just be on to something big here. Mobile data plans spanning more than one device are starting to become common in some parts of the world. NFC already has a means of authenticating and initiating Bluetooth connections is also starting to become reasonably common in wireless speakers.

DoCoMo's idea seems to make sense-- having multiple data plans is not very convenient, or cost-effective, while any technology that improves security will be welcome by the rapidly growing mobile community.

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Source: The U.S. Federal Trade Commission.

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